When developers sell a new build property, it will generally come with a warranty, known in the trade as a latent defect warranty, as standard. There are lots of reasons why this cover is in place, but also some myths and misconceptions about this type of policy, which we’ll look at in this article.
Myth 1: Only poorly developed/built properties need a latent defects warranty
Having a latent defects warranty in place for a new build property is best practice for any builder or developer. Serious structural defects in well-built new properties are rare, but ensuring that the new homeowner is protected just in case is important. It’s the reason why most mortgage lenders require any new build to have this kind of insurance in place before they will agree to lend on the property. This is the case regardless of which developer or team has built the home and is absolutely no reflection on the build quality or reputation of the developers.
Myth 2: Latent defects warranties should only be taken out just before the sale of the property
There is some truth to the idea that a latent defect warranty is needed before a property can be sold, especially if the buyer requires a mortgage. However, ideally, the insurance should be taken out right at the start of the development project so that regular inspections during the build can be done, which could minimise the risk of defects developing later because any issues could be picked up and rectified at the time.
It’s possible to get a latent defects warranty at a later stage, but in general this could be more costly as there are more unknowns about what happened during construction.
Myth 3: If the new homeowner makes structural changes to the property, the original latent defects policy will cover it
A latent defect warranty will only cover the work done in the original build, so if the homeowner goes on to make structural renovations or adds an extension within the cover period, the policy will not cover any of the new work. The homeowner should ensure that there is a separate warranty in place for the new structural work that was done for their peace of mind.